The Importance of Managing Investment Costs | Mission Wealth

hi I’m Karen Osborne Chief investment officer at Mission wealth and today I’ll be discussing The Importance of Being cost conscious within an Investment Portfolio at Mission wealth we are extremely cost conscious and aim to reduce investment related costs wherever possible so why is minimizing investment related costs such as fund level expense ratio is important we believe focusing on low-cost Investments and employing efficient trading practices may help produce higher needed fee returns for our clients investment portfolios so what are fund expense ratios investment funds such as mutual funds or exchange traded funds like ETFs have an Associated expense ratio these are the annual fees that are deducted from a fund’s assets each year to pay for such things as fund expenses management fees administrative fees and operating costs expense ratios are quoted as an annual percentage as an example if a fund has an expense ratio of one percent and you invest 100 into it you should expect that one dollar of that one hundred dollars will be used to pay for annual fees in the first year of investment these fees impact the performance that you as an investor experience let’s say that same Fund invests in a basket of stocks that end up being flat over the course of the first year because your returns are after or net of fees rather than being flat for that same time period your investment in the fund would have lost one percent over the first year minimizing expenses and other investment related costs is an important consideration when constructing and implementing an Investment Portfolio and may help to enhance Investment Portfolio returns as mentioned Mission wealth is very cost conscious as an example we minimize expense ratios across our portfolios by utilizing very low cost Investments such as ETFs or institutional mutual fund share classes as this chart highlights the average expense ratio across all traditional asset classes we invest in is substantially lower than the respective peer average as measured by the lipid category average expense ratio these are real cost savings we are able to pass on directly to our clients in addition to minimizing expense ratios we limit transaction costs by utilizing commission-free ETFs stocks and transaction cost-free mutual funds where available and appropriate in the instance that our preferred Holdings do incur a transaction fee we limit the transaction size and frequency to help minimize such fees We Believe reducing costs such as fund level expense ratios is critical in helping to enhance the returns for our clients by focusing on low-cost Investments and efficient trading practices We believe We may produce higher net of fee returns for our clients investment portfolios and in turn help us better achieve the long-term financial goals of our clients [Music]